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11/09/2009

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Bahrain converged update

July 2011

Ismail PatelResearch Analyst, GCC

Bahrain converged update, July 2012

• Highlights

• Socioeconomic conditions

• Telecoms-market context

• Services

• Networks

• Smartphones, data and messaging, and content and apps

• Informa forecasts

3www.informatandm.com © Informa UK Limited 2012. All rights reserved

Highlights

• The Government has announced the third National Telecommunications Plan, stating that a fiber NBN and 4G LTE should be deployed in the next three years.

• All three mobile operators have trialed and showcased 4G LTE. Licenses are expected to be issued in 1H13. Operators have launched HSPA+.

• Promotional offers in voice, SMS and data dominate the market, especially in the prepaid segment. In postpaid, Viva launched a high-end platinum postpaid plan.

• The fixed-broadband market is saturated with little room for growth. Alternative operators consider LLU off Batelco’s network to be too expensive and only Lightspeed has partially unbundled the incumbent’s network.

• Batelco scrapped plans to sell its Bahraini and Jordanian towers, looking instead to share with rival operators, stating that initial proposal lacked economic sense.

www.informatandm.com © Informa UK Limited 2012. All rights reserved

Socioeconomic conditions

5

Statistics 4Q11

Population 1,341,510

Population growth rate (%) 2.77

Median age 30

Urban population (%)Rural population (%)

7525

Rate of urbanization (%) 1.8

Households 123,730

Country area (sq km) 765

GDP (US$ bil.) 31.38

GDP per capita (US$) 37,941

Annual GDP growth (%) 5.44

Notes: GDP statistics are based on purchasing-power paritySources: Informa Telecoms & Media, IMF, World Bank


Telecoms-market context

• Regulation

• Telecoms-market overview

• Telecoms-market financials


Regulation

Topics Current status

Regulatory body Telecommunications Regulatory Authority (TRA) possesses autonomy from the government, and is involved in all major telecoms and digital-economy decisions.

Fixed-line infrastructure

Owned and operated by Batelco; LLU is legislated but only a few cabinets have been unbundled by Lightspeed. National broadband network is approved and set to be deployed during the next three years.

Spectrum 4G licenses to be issued in 1H13. Also, a license award process for paired spectrum for 3G+ in the 2.6GHz, and in other frequency bands used for mobile telecoms later, will occur later this year or in early-2013 in two sets: two paired sub-bands of 40MHz, which would be freed by end-2012; and an additional 30MHz of paired 2.6GHz spectrum, freed by end-2014

Number portability Has been in service since 3Q11. In 1Q12, the TRA stopped Viva charging BHD1,500 (US$3,978) for MSNS (Mobile Special Number Service) customer cancellations as Viva did not get prior approval for the charge. The TRA said that this charge could potentially impede the uptake of mobile number portability (MNP).


Telecoms-market overview

8

Statistics 1Q11 4Q11 1Q12

Telecoms connections (mil.)• Total mobile• Total fixed

1.600.23

1.690.24

1.720.24

Penetration rate (%)• Mobile• Fixed

122.16185.89

126.25193.97

127.36193.97

Leading mobile operator Batelco Batelco Batelco

Leading fixed-broadband operator Batelco Batelco Batelco

Internet users (mil.) n/a 0.69 n/a

Broadband users (mil.)• Mobile• Fixed

0.240.23

n/a0.29

n/a0.30

Smartphone users (mil.) 0.70 0.76 0.78

Total mobile revenues (US$ mil.) 184.74 201.83 201.44

Mobile ARPU (US$) 34.21 30.79 30.51

Source: Informa Telecoms & Media


Services

• Multiplay services and bundling

• Voice

• Mobile subscriptions by operator and technology

• MVNOs Market overview Profiles

• Broadband

• Fixed-broadband Market overview Providers

• Mobile broadband subscriptions by operator and technology

• Multichannel TV


Multiplay services and bundling

Provider Fixed broadband

Fixed voice

TV Mobile broadband

Mobile voice

Wi-Fi hot spots

Batelco ADSL, FTTH/B

PSTN, ISDN

IPTV (over FTTH/B)

HSPA+ WCDMA Yes

Mena Telecom

WiMAX VoIP No No No No

Zain WiMAX VoIP No HSPA+ WCDMA No

Lightspeed ADSL No No No No No

2 Connect ADSL No No No No No

10

Provider Maximum FB bundle size (elements) Optional extras and discounts

Batelco Triple (fixed broadband, fixed voice, TV)

3G+WiFi PS Vita for FBB customers, paid in instalments

Mena Telecom Dual (fixed broadband, fixed voice) n/a

Zain Dual (fixed broadband, fixed voice) n/a

Lightspeed None n/a

2 Connect None n/a


VoiceVoice subscriptions by type, 1Q10-1Q12

11

Voice net adds by type, 1Q10-1Q12

• Mobile subscriptions reached 1.72 million at end-1Q12, representing population penetration of 127.36%, the lowest in the GCC and Jordan.

• Landlines reached an estimated 241,000 at the same time, with household penetration at 194%, the second highest in the region after Qatar.

• Growth in fixed is stagnant as the market is saturated, whereas the number of mobile subscriptions continues to grow as multi-SIM adoption increases due to promotional offers.

• Whereas there is no suggestion of PSTN being substituted by mobile, managed VoIP services (Mena Telecom and Zain) as well as OTT VoIP services (Skype, etc.) are on the increase and pose a threat to traditional landline revenues.

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12-20,000-10,000

010,00020,00030,00040,00050,00060,00070,00080,000

Fixed Mobile

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q120.0

200,000.0400,000.0600,000.0800,000.0

1,000,000.01,200,000.01,400,000.01,600,000.01,800,000.02,000,000.0

Fixed Mobile

Source: Informa Telecoms & Mediawww.informatandm.com © Informa UK Limited 2012. All rights reserved

Mobile subscriptions by operator and technology

12

Subscriptions 2Q11 3Q11 4Q11 1Q12

Batelco 759,900 752,400 739,000 738,000

Viva 403,100 424,600 446,500 454,000

Zain 467,000 485,010 508,000 528,000

Subscriptions 2Q11 3Q11 4Q11 1Q12

GSM 1,259,550 1,268,390 1,268,150 1,269,660

WCDMA 370,450 393,620 425,500 450,340

By operator

By technology


Mobile ARPU trends by service and operator

13

• Average ARPU was US$36.41 in 1Q12, an increase from US$35.79 in the last quarter and US$35.35 year-on-year.

• The country stands in fourth place in the Middle Eastern region in ARPU.

• Viva has been the strongest performer in revenues per customer, due to its concentrated data-focused subscriber base. Batelco follows with its larger postpaid base, and its increase of promotional offers in prepaid in comparison with its rivals.

• Informa believes the arrest in ARPU decline can be achieved once commercial LTE is launched in the country, with competition between all three operators.

Mobile ARPU by operator by service category, 1Q12



Batelco Viva Zain0

5

10

15

20

25

30

35

40

45

50

37.81

44.94

27.00

AR

PU

(U

S$)

Fixed broadband overview

14

• Due to its microgeography, there is only a limited scope for fixed-broadband to expand in Bahrain.

• Subscriptions were estimated to have breached the 300,000 mark in1Q12.

• Inform estimates that over one third of these subscriptions are SMEs. This has had an effect on household penetration, which stood at 244% if UN household figures are taken into consideration.

• Net growth is expected to drop rapidly as the market becomes increasingly saturated.

• Faster mobile-broadband technologies are expected to cause some degree of substitution from fixed, as most fixed data packages themselves are capped like mobile.

Fixed-broadband subscriptions, 1Q10-1Q12

Fixed-broadband net adds, 1Q10-1Q12


1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q120

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q120

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Fixed-broadband networksFixed-broadband subscriptions by major technologies,

1Q10-1Q12

15

Fixed-broadband market share by technology, 1Q11 and 1Q12

Fixed-broadband net adds by technology, 1Q12 and 1Q11-1Q12


1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q120

40,000

80,000

120,000

160,000

200,000

FTTH/B WiMAX xDSL

• Batelco’s xDSL network continues to be the largest fixed-broadband network by subscribers, with a market share of 61%.

• Mena Telecom and Zain’s WiMAX networks are growing steadily, targeting the low-end residential market, with a 37.7% market share.

• Nuetel first launched FTTH/B in Amwaj Islands. Batelco started to roll out fiber in greenfield areas. The proposed NBN will boost the FTTx market share in Bahrain.

FTTH/B WiMAX xDSL0

10,000

20,000

30,000

40,000

50,000

60,000

1Q12 1Q11-1Q12

FTTH/B1.2%

WiMAX

37.7%

xDSL61.1%

1Q12

FTTH/B0.9%

WiMAX

40.1%

xDSL59.0%

1Q11


Fixed-broadband providers

16

• Mena Telecom and Lightspeed have been growing strongly.

• All operators, other than Batelco and the two WiMAX operators, focus on the SME market.

• Most service plans are capped. Batelco recently upgraded its 8Mbps/60GB, 10Mbps/80GB and 16Mbps/100GB to 90GB, 120GB and 150GB, respectively. It also raised its minimum “up-to” upload speed to 512Kbps.

Fixed-broadband net adds, top five operators, 1Q12 and 1Q11-1Q12

Top five providers by fixed-broadband subscriptions, 1Q12

Fixed-broadband market share by provider, 1Q12


Batelco Bahrain

Mena Telecom

Zain Bahrain

Lightspeed Communications

2 Connect Bahrain

85,440

74,000

40,000

38,000

24,000

2 Connect Bahrain

Batelco Lightspeed Mena Telecom

Zain-5,000

0

5,000

10,000

15,000

20,000

25,000

1Q12 1Q11-1Q12

2 Connect Bahrain; 7.9%

Batelco; 28.2%

Lightspeed; 12.6%

Mena Tele-com; 24.5%

Zain Bahrain; 13.2%


Multichannel TVMultichannel-TV subscriptions by platform, 1Q10-1Q12

17

• Batelco has launched IPTV services in areas where it has rolled out FTTH. It has ruled out deploying IPTV over ADSL.

• As yet, it is still in its trial phase and offers are only made directly to household residents, not publicly. The company will roll out the service commercially over the next 2-3 years, while it looks for a vendor with access to content.

• DTT is now replacing the analog terrestrial network. There are an estimated 2,500 households connected to DTT. Analog TV is expected to be phased out by next year.

• There were an estimated 26,800 pay-DTH households. Most of these subscribe to OSN. The number of free DTH households is estimated at 156,800.

Multichannel TV subscriptions by provider, 1Q10-1Q12


1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q120

50,000

100,000

150,000

200,000

Cable TV DTH DTT IPTV

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q120

5,000

10,000

15,000

20,000

25,000

ADMC ART Batelco BRTC Nuetel OSN

Networks

• Next-generation mobile networks

• FTTH/B


Next-generation mobile networks

Service provider

Technology Status (launch status, coverage, investment, suppliers)

Batelco, Zain, Viva

LTE All operators have trialed and showcased 4G LTE technology in public. Details of licenses and commercial launches will be announced in 1H13.

Zain Bahrain Femtocells Small-cell mobile solutions provider ip.access has announced that Zain Bahrain will deploy its nano3G femtocells and picocells. 2G and 3G small cells will be for public access, private business and residential users. Small-cell deployments increase network capacity in urban locations and improve network access both indoors and in difficult-to-reach locations.

Mena Telecom

WiMAX 802.16e Mena Telecom awarded managed services contracts to Tech Mahindra and Huawei Technologies to upgrade and manage its nomadic WiMAX network.


FTTH/B FTTH/B subscriptions and net adds, 1Q10-1Q12

20

• Nuetel still has a monopoly in the man-made Amwaj Islands in the north.

• Batelco has started to deploy fiber in greenfield areas, though it has not released details of its commercial offers public.

• The proposed NBN will increase FTTH/B take-up in the next five years.

Top FTTH/B providers by subscriptions, 1Q12

FTTH/B net adds, top providers, 1Q12 and 1Q11-1Q12


1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q120

1,000

2,000

3,000

4,000

0

100

200

300

400

500

Subscriptions Net additions

Net ad

ds


Batelco

Nuetel

2,400

1,200

Batelco Nuetel0

200

400

600

800

1,000

1Q12 1Q11-1Q12

Data and messaging and content and apps

• Mobile data and messaging Key developments Revenues

• Operator content and apps


Development Key players Informa viewpoint

Batelco and Jinny Software partner on messaging solutions

Batelco, Jinny Batelco and Jinny Software, a global supplier of messaging, call completion and mobile advertising, formed a partnership in which Batelco will receive a range of messaging solutions, including an MMSC, a WAP gateway, VAS upgrades and an Unstructured Supplementary Service Data (USSD) gateway.

Viva customers move to e-billing

Viva Bahrain Viva has been encouraging its customers to transfer to e-billing since its launch in 3Q11. As an incentive, customers who signed up for e-billing before the end of 2011 received a 5% discount on a month’s bill.

Mobile data and messaging: Key developments


Mobile data revenues

23

Mobile data revenue by operator, 1Q10-1Q12

• Data is growing exponentially as it eats into traditional voice and SMS revenues.

• Viva is trying to position itself as data-oriented. It overtook Zain Bahrain in data revenues in 2Q11. Informa estimates that total operator data revenues reached US$50.4 million in 1Q12, up from US$45.7 million in 4Q11 and US3$1.7 million in 1Q11.

• Viva has the advantage of an active parent company, STC, which is rolling out services that it has tried out in Saudi Arabia to its Bahrain subsidiary.

• The battle for sustaining growth is moving into the lower end of the market.



1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q120

5

10

15

20

25

30

Batelco Viva Zain

Dat

a re

ven

ues

(U

S$

mil

.)

Operator content and apps

Service provider

Service Type Details Device availability

Price

Batelco Samma3ni Music Deal with media group Rotana to gain rights to Rotana's music library. The “Samma3ni”, service features the latest and most popular Arabic music

n/a BHD1 (US$2.65) per month for 25 tracks of choice for postpaid customers.

For prepaid, there is a SimSim Samm3ni Starter Pack at BHD3, featuring 50 minutes of free local calls on Batelco network, BHD1 credit and 25 free music tracks.


Informa forecasts


Fixed-broadband forecastsBroadband subscriptions, 2012-2017

26

Fixed-broadband market share by technology, 2012 and 2017

• The fixed-broadband subscriptions base is expected to reach 511,000 by end-2017. The main factor contributing to this increase will be the government-backed FTTx NBN.

• xDSL will be gradually phased out as fiber becomes more prevalent.

• When LTE launches next year, it will put intense pressure on the WiMAX network in terms of speeds and value for money.


FTTH/B; 1.8%

WiMAX; 35.4%

xDSL; 62.8%

2012

FTTH/B; 18.2%

WiMAX; 28.0%

xDSL; 53.8%

2017

Fixed-broadband subscriptions by technology, 2012-2017


2012 2013 2014 2015 2016 20170

100,000

200,000

300,000

400,000

500,000

600,000

2012 2013 2014 2015 2016 20170

50,000

100,000

150,000

200,000

250,000

300,000

350,000

FTTH/B WiMAX xDSL

Su

bsc

rip

tio

ns

(000

s)

Mobile forecasts by technology and operator

Mobile subscriptions by operator, 2012-2017

27

Mobile subscriptions by technology share, 2012-2017

• 3G+ technologies will continue to grow in the medium term, replacing 2G.

• LTE will start to have an impact from 2015. Bahrain has the advantage of being where the likes of Zain Group and STC first test their future technology. Because of this, 4G developments are expected to materialize rapidly in this market .

• Batelco is expected to maintain its dominant status. Viva will equal Zain in overall subscriptions in the long term as it seeks to attract a wide array of subscribers, from low-end, high-end and data-hungry residents.

• Based on the UN’s understated population estimates for Bahrain, mobile penetration of the population by end-2017 will be 285%.


2012 2013 2014 2015 2016 20170

20

40

60

80

100GSM WCDMA LTE

Sh

are

(%)

2012 2013 2014 2015 2016 20170.0

200000.0

400000.0

600000.0

800000.0

1000000.0

1200000.0

Batelco Viva Zain

Su

bsc

rip

tio

ns

(mil

.)

11/09/2009

Click to edit Master title style

Click to edit Master subtitle styleIsmail PatelResearch Analyst, Informa Telecoms & Media

E-mail: [email protected]

Make better business decisions

make better business decisions. 11/09/2009 click to edit master title style click to edit master...

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